Eastern Europe is growing fast, but is it just a flash
in the pan?

A

Peter Hogsted responds:

Absolutely not, these markets are still in their infancy. There are
86 million homes in our market in Poland, Turkey and Russia,
and, as wealth levels grow, a high priority for people is to improve their
existing homes, catching up with the more developed markets in western
Europe. The markets are under-developed in a retail sense with much of
the sales still going to generalists and open air markets. We have opened
41 stores in the past three years but there is scope to more than double
our stores and establish a multi-channel approach. So I see many years
of good growth to come over the longer term. But these things are never
an entirely smooth road, you have to be ready for some speed bumps
along the way and build flexibility into your plans.

new stores opened in Poland,
Russia and Turkey since 2008

Q

China – stay or leave?

A

Peter Hogsted responds:

To be honest I think we need another 12 months before we can
know for sure. We now have a terrific local team in place and
they have transformed the business from a large loss maker and cash
user into one that is capable of making a profit and generating cash.
But there is more to be done in China and we will need time to prove
our store format is a success with customers to be sure that we have
a winning formula. We have learned some important lessons from our
experiences and we're determined to get that 'stay or leave' decision
right. After all, you don't walk away from a market-leading position in
the world's second largest economy, nor commit more shareholder
funds lightly.